High-Point is understood to have until 14 February to decide whether to make a formal offer after completing due diligence procedures. The two have been in talks since Christmas.
MDA, which employs 220 staff in 10 UK offices, is expected to fetch £4m-6m. Its work is mainly quantity surveying and project management.
High-Point’s UK business includes traditional engineering and water treatment, but it has also built a strong reputation as a project troubleshooter.
High-Point finance director Stephen Greenwood said: “If the deal goes ahead, it would allow us to make a quantum leap in our UK business. At the moment, we are regarded as an engineering consultancy, but we want to be seen as a specialist consultancy in capital projects and developments.”
High-Point, which has a support services listing on the stock market, employs about 400 people worldwide. It has attracted a batch of heavy hitters to its non-executive board, including former Taylor Woodrow chief executive Tony Palmer and ex-chairman of Grand Metropolitan Lord Sheppard.
But in recent months, the company has come under pressure from shareholders to improve its stock market valuation. This stands at £15.7m – a fraction of the value of its larger rivals WS Atkins (£662m) and WSP (£111m). The firm is hoping that the MDA approach will be seen as evidence of its desire to grow.
However, High-Point’s plans could hit a glitch if 30-year old entrepreneur, Stefan Allesch-Taylor, who has a 29.75% stake in MDA, refuses to sell.
Allesch-Taylor, who is chairman of STG Holdings, bought his stake for about £1m in May last year, prompting speculation that he was looking to buy MDA himself.
However, he has so far chosen to sit on the investment. He said: “I have a good rapport with the management of MDA, but the initial spate of enthusiasm on both sides has subsided.”
Allesch-Taylor’s recent attentions have been elsewhere. In the run up Christmas, he bought a 60% stake in a US Internet company for about £85m. And STG, which has, until now, been listed on Ofex as a property firm, is currently trying to relist as an investment company.
Allesch-Taylor told Building in July 1999 that he was keen to turn MDA into a “one-stop” property service provider similar to WS Atkins.
High-Point’s plans could be seen as a move in the same direction, but the firm does not want Allesch-Taylor to retain his sizeable stake. Greenwood said: “We want to get as close to 100% control as we can.”
